Gold Prices Surge as Fed Chair Powell's Remarks Lean Dovish
Published Aug 24, 2018 11:09AM ET
Fed chairman Powell's remarks hit dollar, pushing gold higher.
Investing.com - Gold prices traded higher on Friday as Federal Reserve chairman Jerome Powell emphasized the central bank’s plans for gradual interest rate hikes would be conditioned on the continued strength of the U.S. economy and labor market.
At 11:06 AM ET (15:06 GMT), gold futures for December delivery on the Comex division of the New York Mercantile Exchange gained $20.00, or 1.68%, to $1,214.00 a troy ounce.
In his speech at the Jackson Hole Economic Symposium, Powell indicated that there was no clear sign of an acceleration above the Fed’s 2% inflation objective and said there did not seem to be an elevated risk of the economy overheating.
“As the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate,” he concluded.
Investors took Powell’s speech as a more dovish stance, which seemed to rule out the need for a more aggressive tightening as he suggested a lack of inflationary pressure and put the caveat for further gradual increases in interest rates on a continuation of current economic strength and a strong labor market.
Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
The remarks also weighed on the dollar, extending the greenback’s losses and increasing the demand of the precious metal for holders of foreign currencies.
In other metals trading, silver futures rose 1.88% at $14.815 a troy ounce by 11:08 AM ET (15:08 GMT).
Palladium futures traded up 2.28% to $932.00 an ounce, while sister metal platinum rose 2.03% at $794.20.
In base metals, copper gained 2.05% to $2.709 a pound.
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Written By: Investing.com
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